Ben Travers and Andrew Holland discuss a new law which provides a mechanism to stop multiple employers from having to make superannuation contributions for a director that may sit on multiple boards.
Company directors who sit on more than one board (or employees who work for more than one employer) may exceed their annual concessional superannuation contributions cap of $25,000 due to the compulsory superannuation contributions that each company or employer is separately required to make based on the individual’s earnings from that company or employer.
These excess contributions can result in additional administration and tax payments for the individual and their superannuation fund. Our experience is that taxpayers would often prefer to avoid the excess contributions arising in the first place, provided that they could receive the equivalent amount in some other form (such as additional director fees or salary).
Legislation that can prevent individuals with multiple employers, from exceeding their concessional superannuation contributions cap (currently $25,000) received Royal Assent on 2 October 2019. Affected individuals will now be able to ask the Australian Taxation Office to exempt their employer from the requirement to pay superannuation contributions when the individual is likely to exceed this cap.
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